Crude oil tumbles on euro zone fears, gloomy global outlook

Investing.com - Crude oil futures tumbled more than 1% during U.S. morning hours on Monday, trading close to the lowest level since early August as appetite for riskier assists weakened amid mounting concerns over the outlook for global growth.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD91.75 a barrel during U.S. morning trade, tumbling 1.25%.

Earlier in the session prices fell by as much as 1.75% to hit a daily low of USD91.26 a barrel, the weakest level since September 20, when prices touched a six-week low of USD90.96 a barrel.

A recent rally spurred by a series of stimulus measures by major central banks around the world in a bid to bolster their economies appears to have faded, with investors shifting their focus back to concerns over the global economy.

New York-traded oil prices plunged 6% last week, amid growing concerns over the global economic outlook and the impact on future oil demand prospects.

Sentiment remained vulnerable amid uncertainty over whether Spain will request a full scale sovereign bailout.

Over the weekend, Spain’s economy minister said the country would not rush to seek external financial aid, as pressure mounted on debt-strapped country to seek a rescue package.

Renewed concerns over Greece also added to the risk-off trade environment, after German magazine Der Spiegel reported over the weekend that the country faces a EUR20 billion budget shortfall, almost twice as much as previously thought.

Also Monday, a report showed that Germany’s Ifo business confidence index deteriorated to the lowest level since March 2010 this month, amid ongoing concerns over euro zone’s debt crisis.

The German Ifo index fell to 101.4 from 102.3 in August, the fifth monthly decline in a row, compared to expectations for a reading of 102.5.

The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.

The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, advanced 0.3% to trade at 79.69.

A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery tumbled 1.7% to trade at USD109.56 a barrel, with the spread between the Brent and crude contracts standing at USD17.81 a barrel.

London-traded Brent prices continued to come under pressure from recent comments made by Saudi Arabia, saying that the Kingdom was likely to keep output high in an effort to lower prices further weighed on the energy complex.

Analysts said that the market is now balancing Saudi assurances that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran amid tighter Western sanctions on Tehran over its disputed nuclear program.